It Looks Like State Aid – But It’s Really a Public Works Contract

The CJEU Clarifies What Counts as a Public Works Contract

The Court of Justice of the European Union (CJEU) has given an important ruling about when a construction deal is considered a public works contract under EU rules.

The case (C-28/23) was about a complicated agreement between Slovak authorities and a private company to build a national football stadium. The project was partly funded by the state.

Main Points

• What qualifies as a “public works contract”?

• Can state aid affect the legal classification?

• Can such contracts be cancelled if they break procurement rules?

  
  

1. What is a public works contract?

The Court said that a deal can count as a public works contract even if it’s made up of different agreements (like a grant and a later option to buy), as long as certain conditions are met:

a) The contract must create mutual legal obligations

This means:

• Both sides must be legally bound to do something

• These obligations must be enforceable in court

• Even if the supplier does not have to sell the building, the contract may still be binding if the state takes on obligations, such as financial support or a promise to buy

  
  

b) The building must be constructed according to the state’s requirements

The public authority must have a clear influence over the design — for example:

• Size, layout, structural elements

• In this case, the Slovak authorities required that the stadium follow UEFA rules — this counted as a form of control

  
  

c) The state must have a direct economic interest

This means the state gets something of value from the deal:

• Ownership or future ownership

• Rights to use the building

• Sharing in financial riskIn this case, the state had a “right of first refusal”, which means: if the stadium was sold, the state had the first chance to buy it. The state also carried financial risk if the project failed.

  
  

d) Option to sell / Obligation to buy

• The supplier (private company) had the option to sell the building to the state

• The state was obliged to buy it if the supplier decided to sell

• The Court said what matters is not the formal structure, but the real content of the deal

  
  

2. What About State Aid?

The deal was partly financed through public grants (state aid).The Court said: Even if the state aid has been approved by the EU Commission, the contract can still be considered a public works contract, and then procurement rules apply.

This is important because some may think that if the project is based on grants or aid, the supplier’s duties are less clear. But the Court emphasized that as long as the public authority gets something in return and has influence over the work, it's likely to count as a contract under procurement rules.

3. Can the Contract Be Cancelled?

The Court also looked at national rules that allow public contracts to be cancelled if they break procurement law.

The conclusion was:

• EU law does not stop Member States from cancelling contracts for this reason

• Such cancellation is allowed as long as the national rules respect EU principles (like legal certainty and fairness)

  
  

Final Conclusion

The Court clarified that even when a project involves state aid, it can still fall under EU procurement law if:

• There are mutual legal obligations

• The public authority has control over how the building is made

• The public gets a real economic benefit

• There is a clear link between the financial support and the construction

  
  

So: Giving a grant or financial support doesn’t automatically mean the rules on public procurement don’t apply.

This decision matters because it means public authorities must carefully assess complex agreements — not just look at what kind of contract it is, but what it really means in practice.